Estate planning is the process of making important decisions about how your assets will be distributed after you pass away. This includes naming a person to manage your assets, known as a fiduciary, and adding additional protections to ensure your assets are distributed as you intended.
You can choose to leave assets to someone in a will or trust, or you may opt for someone else to administer the estate. Each option has different levels of complexity and cost.
To create a successful estate plan, it’s important to provide your estate planner or attorney with as much information as possible about your personal values and wishes. There are some important questions you should ask your attorney about estate planning.
These questions will help ensure that your wishes are carried out after your death.
Some of these questions include: who will be in charge of managing your assets, how will your assets be distributed, and what additional protections can be added to ensure your wishes are respected. By working closely with your attorney, you can create an estate plan that reflects your values and ensures that your loved ones are provided for after you pass away.
Helps protect your family
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Estate planning refers to the process of planning how you want your estate divided and distributed, as well as how you want your finances handled after you die.
This includes things like writing a will, creating a trust, or establishing either of these in another country. It can also include deciding if you want to leave some or all of your estate to charitable organizations.
Many people put off estate planning because they don’t want to think about death or they feel there’s still time before anything needs to be done. However, this is very important and can have serious consequences if not done properly.
If you die without having prepared an estate plan, it could take years for your family to settle your estate, and they may not know what to do. This can be very stressful for them at a time when they are already grieving.
They also may not get what they want or need from the inheritance they receive. In addition, there is the risk of lawsuits and fraud that can come up due to lack of documentation.
Provides a plan for how to handle your child’s inheritance
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Children receive inheritance from their parents, so it’s only natural to want to provide some sort of inheritance for your children.
However, providing a child with an inheritance can be very difficult and dangerous if you do not have proper estate planning in place.
You may wish to provide your children with financial assistance or share ownership in family property, but only if you are certain that they will use it well. It’s hard to know that unless you have complete control over the situation.
With estate planning, you can create a will that states what you would like to happen to your property after you pass away. This can help prevent any family conflicts and/or misunderstandings about what should happen to the inheritance.
In addition, with estate planning, you can designate a guardian for any children that you have who are under the age of 18. This way, there is no question about who will take care of them.
Ensures that your loved ones are taken care of
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Estate planning is about leaving what you have to whom you want, when you want. It’s about making sure that your children, grandchildren, other relatives, and friends are provided for and that their needs are met.
You may want to make provisions for special charities or organizations that are important to you or where you work. You can also designate financial gifts to organizations that mean a lot to you.
Of course, the most important gift is giving the people you love the most what they need most: You! Your love, your time, your assets. Estate planning helps make that possible.
Proper estate planning also includes including protective measures such as preventing future generations from fighting over your assets and going through a lengthy court process to determine who gets what. This protects your loved ones and allows them time to grieve before taking care of business.
Helps you organize your financial affairs
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Estate planning helps you organize your financial affairs by identifying who you want to manage your assets and for whom you want to create heirs.
It also helps you decide how you want to distribute your assets after you’re gone. For example, you can decide to give all of your assets to a specific person or organization or to reserve some for future generations.
As mentioned before, an estate plan can be tailored to fit your personal needs and desires regarding asset distribution after your death. There are many different types of estate planning documents, some of which are explained below.
Protective trusts prevent irresponsible use of inheritance funds until a certain date, ensuring that the beneficiary uses the money appropriately and for a specific purpose.
Allows you to name a guardian for your children
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Another important reason to have an estate plan is to name a guardian for your children. If you have children and there is a possibility that they may be taken from you due to divorce or death, then you need to have a plan in place.
You can include instructions in your will regarding the guardianship of your children. You can also include instructions in your trust, which may be more appropriate if you have significant assets separate from your children.
In most states, if you do not name a guardian in your estate plan, the courts will assign one. This may not be the person you would prefer and may not be someone who knows what is best for your children. It may also be expensive as the court will hold a hearing and appoint someone based on evidence.
It is important to discuss with your attorney whether or not it is appropriate for you and your situation.
Establishes a plan for what to do with your pets
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Pets have become a significant part of many households. As pets have become more popular, pet care has also dramatically improved.
Today, you can find services that help you train your new pet, supply them with adequate food and shelter, and give them plenty of fun and playtime.
However, even the best pet care professionals may not know everything about you and your pets. Only you know the intimate details of your relationship with your pets.
This is why estate planning for pets is so important. It allows you to determine who will take care of your pets and how they will be taken care of after you’re gone. It can even prevent unnecessary stress for those around you after your death.
If you are one of the many people that believes that ‘inanimate objects’ deserve more respect than they currently receive, then estate planning for pets is essential.
Protects you and your family from creditors
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If you have a will, it can protect you and your family from creditors. If you die without a will, called dying intestate, your assets can be claimed by the state.
This is called intestacy and it happens because there is no clear direction on who gets what. The state then decides who gets what.
This could put a hold on the distribution of your assets until it is cleared by the state. This also could mean that people you did not want to get things do not, due to the bureaucracy of the state.
Your loved ones could spend years trying to get what they are owed by going to court. This is why it is important to have a will and keep it updated. It can be hard to think about this and take care of it, but don’t let that stop you.
Allows you to choose the manner in which you leave assets to loved ones
Once you have decided to create an estate plan, you will need to decide how you want to distribute your assets. You can choose to give assets directly to individuals, or you can put them in a trust where a trustee distributes the assets as specified in the trust.
You can also set up generation-skipping transfers, which allow grandchildren or other more distant descendants to receive assets. You simply need to decide whether or not you want your children or other heirs to receive their parent’s property immediately or if they should only receive it after a certain age. Estate planning allows for a lot of discretion in this area.
One of the most important elements of estate planning is protecting your loved ones after you pass away. If you have accumulated significant wealth, then one of the primary concerns is how to protect that wealth from being distributed in an inappropriate manner. This may be due to alcoholism or other issues that your family members may have.